SEOUL, March 25 (Korea Bizwire) — The South Korean economy expanded 3.3 percent in 2014 as increased facility investments offset slowing growth in construction investment and exports, the central bank said Wednesday.
The revised 2014 reading by the Bank of Korea (BOK) is on par with an earlier estimate of 3.3 percent released in January. It marks a slight improvement from 2013, when the economy expanded 2.9 percent from a year earlier, according to the revised data.
The South Korean economy, Asia’s fourth-largest, has been going downhill as it suffered economic headwinds. On-quarter growth, which reached 1.1 percent in the first quarter, slowed to 0.5 percent in the second quarter and fell to 0.3 percent in the fourth quarter after slightly picking up to 0.8 percent in the third quarter.
Facility investment increased 5.8 percent last year, turning around from a 0.8 percent on-year contraction in 2013. Construction investment growth, however, sharply slowed to 1 percent from a 5.5 percent growth in the previous year.
Private spending came in at 1.8 percent, remaining mostly unchanged from a 1.9 percent on-year gain in the previous year.
Exports, which account for around 50 percent of the GDP, rose 2.8 percent, slowing from a 4.3 percent increase in 2013, while growth in imports quickened to 2.1 percent from 1.7 percent.
The data follows a recent rate cut by the BOK. The central bank unexpectedly slashed the base rate to a record low of 1.75 percent earlier this month, as it joined a global easing wave to spur growth.
“A quarter percentage point rate cut was deemed desirable as growth is expected to fall below forecasts and inflation is also expected to fall. We considered how there is a need to further boost economic recovery momentum even after last year’s two rate cuts,” BOK Gov. Lee Ju-yeol noted in a March 12 press conference.
Slowing growth has been bolstering views the BOK will likely lower its economic growth outlook on April 9 when it releases its latest economic updates.
In January, the central bank cut its growth forecast for this year to 3.4 percent from 3.8 percent, while slashing its inflation outlook to 1.9 percent from 2.4 percent.
The data, meanwhile, showed that Koreans’ purchasing power improved mostly due to a strengthening won.
Their per capita gross national income, a gauge of the population’s purchasing power, reached US$28,180, up $2,001 from 2013.
Korea’s gross savings rate came in at 34.7 percent in 2014, up 0.4 percentage point from the previous year, according to the BOK data.